Dear Mr. Bruce,

From cabled accounts of happenings in Australia, I conclude that
you are having an extremely busy time. The shipping strike must be
a source of the gravest anxiety to you. [1] The visit of the
Empire Press Delegation [2], although it will doubtless afford
some interesting occasions, must involve you in considerable
additional work and this morning's papers give a resume of the new
tariff schedules which I imagine will give rise to some rather
vigorous parliamentary discussions. [3]

'FORTNIGHTLY REVIEW'

The Intelligence Department here is sending you a copy of the
September 'Fortnightly Review'. It contains a fairly interesting
article by Mr. Archibald Hurd [4] on Empire Development, drawing
attention to the reports of the Imperial Economic Committee,
'Sheltered Markets', the Labour Party's report on sweated imports
and your comments on this report. It suffers from being more of a
resume than being anything constructive but at the same time I
think you will be interested to read it.

HOUSING IN RUSSIA

I am enclosing cutting from the 'Times' dealing with the
'catastrophic' conditions of housing in Russia which I think you
may find of very considerable value at the present time. Even to
the outsider it is becoming clear that Russia and the communists
generally are putting into operation plans against the welfare of
the British Empire. The Chinese trouble [5] followed by the
shipping strike are two moves well calculated to embarrass the
British Empire to a most serious extent because there is no
possible doubt but that the Empire now depends, and must continue
to depend, for a large number of years upon the economic strength
and prosperity of the United Kingdom.

I do not know whether my views on this subject are of any use to
you but it appears to me that, from the Russian and communists'
standpoint, they are perfectly right in selecting the British
Empire for attack. The Empire stands for everything that Russia
and the communists particularly dislike and in particular it
stands for a broad based and enlightened nationalism. I imagine
that nothing can have given the communists greater umbrage than
the present movement in the British Labour Party in the direction
of Empire. The more we can develop that interest the more
effectively shall we be able to counter the propaganda which I
must say appears to me to be quite cleverly engineered.

The British Labour Party has before it three paths to choose from.

On the extreme left there is Soviet Russia, the dictatorship of
the Proletariat. The means to obtain this end [is] continuous
wrecking tactics so far as British industry is concerned so as to
render the condition of the worker, the taxpayer and the
Government of Great Britain impossible. I think that few, if any,
of the British Labour Members, with the exception of Saklatvala
[6], the Battersea Communist, consciously adhere to this programme
but I am afraid that a number do not recognise its dangers and
quite a lot are still hypnotised by the latent possibilities of
close friendship with the Soviet.

Ramsay MacDonald [7] and his school adhere to their old programme
of international socialism and the solution of problems through
inter-national action along constitutional paths. I suppose it
would be accurate to say that the bulk of the Labour Party
nominally take this view but their position is rendered
extraordinarily difficult by the white anting of the communists in
the constituencies and by the very vague and shadowy prospect of
reaching any real solution of urgent problems along those lines.

The third and new path which is opening itself to the Labour Party
is within the Empire. There is still a great deal of confusion of
thought on this subject and among the old guard a very
considerable degree of suspicion and hesitation but the most
satisfactory and interesting feature of the situation is that
interest in the Empire questions is not confined to any one
section of British political labour.

On the extreme right we have Thomas [8], ineffective in the
counsels of the party but most effective so far as a large section
of the public is concerned. Haden Guest [9] must also be
considered as a right winger but he is not under suspicion in the
party in the same way as Thomas. Among the solid old guard trade
unionists there is a very considerable element now beginning to
take an active interest in Empire questions and from this section
I look for steady, if perhaps rather slow, development in our
direction. The so-called Labour intellectuals in Parliament have
so far been of remarkably little use to us. They almost all belong
to MacDonald's International Socialist Group.

We now come to the most interesting section, the left of the
Parliamentary Party. It is here that Empire ideas have been able
to make the greatest progress and fortunately to obtain the
support of the two most influential men in this Group, namely Tom
Johnston [10] and George Lansbury. [11] I attach the utmost
importance to the left wing because they can preach 'Empire' in
their own way and in their own words without being branded as
reactionary imperialists.

In connection with the education of British Labour, I attach very
great importance to the Empire Parliamentary Association's visit
to Australia next year. D'Egville [12], with whom I am constantly
in touch, tells me that the Australian Parliament has invited 16
British Delegates to the Conference in Australia. I hope that it
will prove possible to include at least 6 Labour Members and to
get the right men and this for two reasons: firstly because of the
effect which the trip would have on the men selected and,
secondly, because of the reflex action upon Labour in Australia.

There is very little well informed opinion in the British Labour
Party about the Australian Labor Party. The general impression
seems to be that the Australian Labor Party suffers from a narrow
realism, so far as Australian affairs are concerned, expressed in
adherence to anti-immigration policy and to the doctrines of
exaggerated protection. This opinion is in curious contrast to the
Australian Labor Party's overseas policy which appears to be
dominated by cloudy vague idealism so characteristic of MacDonald
and his particular group in the British Labour Party.

MacDonald is having, at the present time, a very severe struggle
to retain his influence in the Labour Party. His attitude over the
recent Coal strike has infuriated the Trade Unions.

In the whole of this connection I am very glad to be able to tell
you that 'Sheltered Markets' [13] is having, and seems likely to
continue to have, very considerable influence both among Labour
Members of Parliament and among Trade Union people.

Coming back to the enclosed cutting, what I particularly want to
draw your attention to is the light which it throws upon the
standard of living in Russia under the Soviet Government. I
believe it is true to say that the general standard of life in
Russia in 1924 was lower than in 1913 under the Czar and this
seems to me to render extraordinarily ridiculous the Communists'
appeal for a united front of British workers with the workers of
other countries but particularly with Russia to establish a
dictatorship of the Proletariat.

If the British Labour Party's interest in the Empire can be
increased and stimulated and if they will bring to Empire problems
some Labour and Trade Union principles, it seems to me that the
Empire would have everything to gain and nothing to lose by
Labour's active participation in the discussion [and] solution of
Empire questions.

NOTE ON ECONOMIC MEMORANDUM

With reference to the memorandum which I sent you in my last
letter about the economic position of Great Britain and
particularly with regard to the section dealing with price levels,
I am enclosing the most recent set of commodity prices and index
numbers from the 'Times'. It appears to me that some very
interesting work could be done on this. You will notice that in
April 1920 the index number of foodstuffs was 301.2, of materials
382.8 and the total index number was 352.9. I suggest that the
great expansion of Australia's industrial production occurred
during the period of very high price levels. To-day the position
is reversed. The food index number is 163.1 and the materials
156.6 but this obviously does not represent the whole position
for, included in materials, we have raw materials with cotton with
an index number of 208, wool at 201/2d. per lb. and rubber at
3/61/2d.

If my memorandum on this subject interested you at all, I would
suggest that you ask Wickens [14] to see whether he could find a
basis for estimating the change in the purchasing power of the
value added to materials in process of manufacture. So far as I
have time I shall follow this matter up somewhat further from this
end.

IMPERIAL ECONOMIC COMMITTEE

Since I last wrote I have had two long conferences with the
Secretary of the Economic Committee [15] in reference to the scope
and form of the Fruit Report and we have drawn up an elaborate
draft outline for the Fruit Report along the lines which I
indicated in my letter to you of August 27th. I am proposing to
get in touch with a number of Members of the Committee before its
sittings are resumed, so as to have some agreement beforehand and
thus be able to make the Fruit Report a more important and
interesting document than the Meat Report.

DRIED FRUIT

You will be glad to know that the information that I forwarded to
you and to the Dried Fruit Board in April in reference to the
probable effect of the winter drought in Smyrna upon the Smyrna
crop of sultanas has proved to be correct. The Smyrna crop will be
about 28,000 tons as against 50,000 last year and I understand
that the Smyrna quality is also affected.

This is having an excellent effect on the sales of Australian
sultanas and I can only 'impiously' wish that a combination of
drought, diseases and Haden Guest may strike the Greek currant
crop next season. [16]

Yours sincerely,
F. L. MCDOUGALL